At the beginning of 2016, Robotics Inc. acquired a manufacturing
facility for $13.7 million. $10.7 million of the purchase price was
allocated to the building. Depreciation for 2016 and 2017 was
calculated using the straight-line method, a 20-year useful life,
and a $2.7 million residual value. Assume that 2016 depreciation
was incorrectly recorded as $40,000. This error was discovered in
2018.
How should Robotics account for the error?
What is depreciation on the building for 2018 assuming no change in
estimate of useful life or residual value?
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